Short title

This Act may be cited as the

Home Energy Affordability Tax Relief Act of 2008

or the

HEATR Act of 2008

Refundable credit for residential energy costs

(a)

In general

Subchapter B of chapter 65 of the Internal Revenue Code of 1986 (relating to rules of special application) is amended by adding at the end the following new section:

6431.

Refundable credit for residential energy costs

(a)

General rule

In the case of an individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the lesser of— (1)33 percent of the amount of the taxpayer’s residential energy costs for such taxable year, or (2)$500. (b)

Income limitation

(1)

In general

The amount allowable as a credit under subsection (a) for any taxable year shall be reduced (but not below zero) by an amount which bears the same ratio to the amount so allowable (determined without regard to this paragraph) as— (A)the amount (if any) by which the taxpayer's adjusted gross income exceeds $50,000 (twice such amount in the case of a joint return), bears to (B)$10,000 (twice such amount in the case of a joint return). (2)

Determination of adjusted gross income

For purposes of paragraph (1), adjusted gross income shall be determined without regard to sections 911, 931, and 933. (c)

Definitions and special rules

For purposes of this section— (1)

Residential energy costs

The term residential energy costs means the amount paid or incurred by the taxpayer during the taxable year— (A)to any utility for electricity or natural gas used in the principal residence of the taxpayer during the heating season, and (B)for any qualified fuel for use in the principal residence of the taxpayer but only if such fuel is the primary fuel for heating such residence. (2)

Principal residence

(A)

In general

The term principal residence has the meaning given to such term by section 121; except that no ownership requirement shall be imposed. (B)

Special rules

Such term shall not include— (i)any residence located outside the United States, and (ii)any residence not used as the taxpayer’s principal place of abode throughout the heating season. (3)

Heating season

The term heating season means October, November, December, January, February, and March. (4)

Qualified fuel

The term qualified fuel includes propane, heating oil, kerosene, wood, and wood pellets. (d)

Other special rules

(1)

Individuals paying on level payment basis

Amounts paid for natural gas under a level payment plan for any period shall be treated as paid for natural gas used during the portion (if any) of the heating season during such period to the extent of the amount charged for natural gas used during such portion of the heating season. A similar rule shall apply to electricity and any qualified fuel. (2)

Homeowners associations, etc

The application of this section to homeowners associations (as defined in section 528(c)(1)) or members of such associations, and tenant-stockholders in cooperative housing corporations (as defined in section 216), shall be allowed by allocation, apportionment, or otherwise, to the individuals paying, directly or indirectly, for the residential energy cost so incurred. (3)

Dollar amount in case of joint occupancy

In the case of a dwelling unit which is the principal residence by 2 or more individuals, the dollar limitation under subsection (a)(2) shall be allocated among such individuals under regulations prescribed by the Secretary. (4)

Treatment as refundable credit

For purposes of this title, the credit allowed by this section shall be treated as a credit allowed under subpart C of part IV of subchapter A of chapter 1 (relating to refundable credits). (e)

Inflation adjustment

(1)

In general

In the case of any taxable year beginning in 2009, each of the dollar amounts contained in subsections (a)(2) and (b)(1)(A) shall be increased by an amount equal to— (A)such dollar amount, multiplied by (B)in the case of— (i)the dollar amount contained in subsection (a)(2), the fuel price inflation adjustment for 2009, and (ii)the dollar amount contained in subsection (b)(1)(A), the cost-of-living adjustment determined under section 1(f)(3) for 2009 by substituting calendar year 2007 for calendar year 1992 in subparagraph (B) thereof. (2)

Fuel price inflation adjustment

For purposes of paragraph (1)(B)(i)— (A)

In general

The fuel price inflation adjustment for 2009 is the percentage (if any) by which— (i)the CPI fuel component for October of 2008, exceeds (ii)the CPI fuel component for October of 2007. (B)

CPI fuel component

The term CPI fuel component means the fuel component of the Consumer Price Index for All Urban Consumers published by the Department of Labor. (3)

Rounding

(A)

Credit amount

(i)

Credit amount

If the dollar amount in subsection (a)(2) (after being increased under paragraph (1)), is not a multiple of $10, such dollar amount shall be rounded to the nearest multiple of $10. (ii)

Income threshold

If the dollar amount in subsection (b)(1)(A) (after being increased under paragraph (1)), is not a multiple of $50, such dollar amount shall be rounded to the next lowest multiple of $50. (f)

Application of section

This section shall apply to residential energy costs paid or incurred after the date of the enactment of this section, in taxable years ending after such date, and before January 1, 2010.

(b)

Conforming amendments

(1)Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by striking or 6428 or and inserting , 6428, 6431, or. (2)The table of sections for subchapter B of chapter 65 of such Code is amended by adding at the end the following new item:

Sec. 6431. Refundable credit for residential energy costs..

(c)

Effective date

The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.

Elimination of deduction for intangible drilling and development costs for major oil companies

(a)

In general

Section 263(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new sentences: This subsection shall not apply during any taxable year with respect to an applicable taxpayer (as defined in section 901(m)(2)) if during the preceding taxable year for the production of oil, the average price of crude oil in the United States is greater than $34.71 per barrel, and for the production of natural gas, the average wellhead price of natural gas in the United States is greater than $4.34 per 1,000 cubic feet. For purposes of the preceding sentence, the Secretary shall determine average prices, taking into consideration the most recent data reported by the Energy Information Administration. For taxable years beginning after December 31, 2008, each dollar amount specified in this subsection shall be adjusted to reflect changes for the 12-month period ending the preceding September 30 in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor. (b)

Effective date

The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

Modifications of foreign tax credit rules applicable to major oil companies which are dual capacity taxpayers

(a)

In general

Section 901 of the Internal Revenue Code of 1986 (relating to credit for taxes of foreign countries and of possessions of the United States) is amended by redesignating subsection (m) as (n) and by inserting after subsection (l) the following new subsection:

(m)

Special rules relating to major oil companies which are dual capacity taxpayers

(1)

General rule

Notwithstanding any other provision of this chapter, any amount paid or accrued by a dual capacity taxpayer which is an applicable taxpayer (as defined in section 5896(b)) to a foreign country or possession of the United States for any period shall not be considered a tax— (A)if, for such period, the foreign country or possession does not impose a generally applicable income tax, or (B)to the extent such amount exceeds the amount (determined in accordance with regulations) which— (i)is paid by such dual capacity taxpayer pursuant to the generally applicable income tax imposed by the country or possession, or (ii)would be paid if the generally applicable income tax imposed by the country or possession were applicable to such dual capacity taxpayer.

Nothing in this paragraph shall be construed to imply the proper treatment of any such amount not in excess of the amount determined under subparagraph (B).

(2)

Applicable taxpayer

For purposes of this subsection, the term applicable taxpayer means, with respect to operations in the United States— (A)any integrated oil company (as defined in section 291(b)(4)), and (B)any other producer or refiner of crude oil with gross receipts from the sale of such crude oil or refined oil products for the taxable year exceeding $100,000,000. (3)

Dual capacity taxpayer

For purposes of this subsection, the term dual capacity taxpayer means, with respect to any foreign country or possession of the United States, a person who— (A)is subject to a levy of such country or possession, and (B)receives (or will receive) directly or indirectly a specific economic benefit (as determined in accordance with regulations) from such country or possession. (4)

Generally applicable income tax

For purposes of this subsection— (A)

In General

The term generally applicable income tax means an income tax (or a series of income taxes) which is generally imposed under the laws of a foreign country or possession on income derived from the conduct of a trade or business within such country or possession. (B)

Exceptions

Such term shall not include a tax unless it has substantial application, by its terms and in practice, to— (i)persons who are not dual capacity taxpayers, and (ii)persons who are citizens or residents of the foreign country or possession.

(b)

Effective date

(1)

In general

The amendments made by this section shall apply to taxes paid or accrued in taxable years beginning after the date of the enactment of this Act. (2)

Contrary treaty obligations upheld

The amendments made by this section shall not apply to the extent contrary to any treaty obligation of the United States.

Elimination of enhanced oil recovery credit for major oil companies

(a)

In general

Section 43 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(f)

Nonapplication of section

This section shall not apply during any taxable year with respect to an applicable taxpayer (as defined in section 901(m)(2)) if during the preceding taxable year for the production of oil, the average price of crude oil in the United States is greater than $34.71 per barrel. For purposes of the preceding sentence, the Secretary shall determine average prices, taking into consideration the most recent data reported by the Energy Information Administration. For taxable years beginning after December 31, 2008, the dollar amount specified in this paragraph shall be adjusted to reflect changes for the 12-month period ending the preceding September 30 in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor.

(b)

Effective date

The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.